Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)


Income Tax Updates- March 2018


Gist of Judgments of High Courts
Sr. No. Name of the Appellant / Respondent Appeal No and date of decision Gist of Judgments / Orders passed
1 Pr CIT Vs Hind Filter ITA 662/2015 dt 13.11.17 (Bombay HC) The CIT (A) found that the company has advanced Rs.1,00,00,000/- as inter-corporate deposit to the appellant which was a public company. He concluded that the provisions of Section 2(22)(e) were not applicable and the payment was made in the ordinary course of business……….. The Tribunal as the last fact finding Court has clearly opined that the company was one in which the public was substantially interested. In the circumstances the question nos.1 and 2 as proposed will not construe substantial questions of law that requires consideration by the Court
2 Pr CIT Vs Kitchen Express Overseas Tax Appeal 966/17 dt 6.12.17 (Gujarat HC) 89 407 (upholding ITA No.1174/Ahd/2014 dt 28.6.17) Expenditure incurred on software development services which were in nature of maintenance and support services providing essential backup to assessee, who had procured software for its business purpose, was to be allowed as deduction
3 CIT Vs Ashok Kumar Rati T.C.A 590/17 dt 7.12.17 (Madras) 89 406 (ITA No.763/Mds./2016 24.6.16) “land is to be treated as agricultural land only and sale of said land cannot go rise to any taxable capital gains and it is to be considered as agricultural land in terms of Sec.2(14)(iii)(b) of the Act” was upheld
4 CIT Vs Vasantha Anirudhan ITA 78/08 dt 12.1.18 90 74 (Kerala) It is made clear that the present respondent being alegal heir of the assessee, recovery would be made only to the extent of the estate of the assessee capable of meeting the liability as provided in Section 159(6)
5 CIT Vs Banaras House Ltd ITA 583/054 dt 17.1.18 Delhi HC) Further, when a liability was acknowledged by the debtor, it cannot be said that the claim of the creditor was barred by limitation. In case of 16 creditors, the credit balance was returned or adjusted for the next financial year. Provisions of Section 41(1) of the Act were not attracted.
6 Vipul Chavda and Ors Vs State of Gujarat Special Criminal Application 10055/17 Dt 18.1.18 (Gujarat HC) It is declared that the department is entitled to retain the cash till the final conclusion of the proceedings under the Income Tax Act. The Investigating Officer is permitted to handover the Muddamal currency notes amounting to Rs.13,00,000/- (Thirteen Lakh) to the applicant-Deputy Director of Income Tax
7 Pr CIT Vs Satya Sheel Khosla ITA No.289/2016 dt 29.1.18 (Delhi HC) so far as they relate to consideration for professionals should be treated as income by virtue of the amendment of 2017. However, with respect to the Revenue’s contention that regardless of that amendment even in the pre-existing law, this amount had to be treated as receipts and therefore taxable as income, cannot be accepted.
8 Commissioner of Gift Tax Vs Jindal Equipment Leasing GTA 1/2005 and Batch dt 29.1.18 (Delhi HC) ITAT intervened in gift tax proceedings (which are the subject matter in these appeals), it considered only the validity of the proceedings, but, did not consider whether in fact the transaction under Section 4(1)(a) amounted to a deemed gift; no conclusive finding in that regard was rendered; nor any finding could have been rendered or was given
9 Shayona Pulp Conversion Mills Vs CIT WP 3714 & 4499/13 dt 1.2.218 (Bombay HC– Aurangabad) Whenever there is special provision in special enactment fixing the period of limitation even the Court cannot extend that period and the provision of section 5 of the Limitation Act cannot be applied in those cases. There cannot be dispute over that proposition. In the present matter, due to the provision like section 119(2)(b) made in the Income Tax Act, it can be said that discretionary power is given to the Board to issue such instructions and only after that the assessing authority can use such power
10 Navodaya Education Trust v. Union of India WP 3468-3472 /18 (T-IT)dt 5.2.18 90 148 (Karnataka HC) Trust rendering it as merely a skeleton for the purpose of exemption to Educational Trust and rather than a real Educational Trust, solely existing for the purpose of Education. Such sham or bogus Trusts cannot be held to be entitled to exemption under the provisions of Section 10(23-C) of the Act and therefore the Respondent Authority has rightly withdrawn the approval of the petitioner - Trust under the said provision.
11 Prime Ceramics Vs ITO ITA 355/Ahd /2016 dt 5.2.18 it is also clear from material on record that the deferred revenue expenditure incurred by the assessee is not of the nature which can be covered by section 35D.
12 Kamla Devi Sharma Vs ITO ITA 1026/JP/2016 dt 6.2.18 the issue of notice U/s 143(2) in reassessment proceedings, prior to finalizing re-assessment order, cannot be condoned by referring to Section 292BB and is fatal to the order of re-assessment
13 Pr CIT Vs Nokia Solutions & Network ITA 135/2018 dt 6.2.18 (Delhi HC) if the assessment is concluded in favour of a non existing entity, then notwithstanding Section 292B, the position does not improve. Applying Spice Entertainment Ltd. (supra), this Court had in Commissioner of Income Tax v. Dimension Apparels Pvt. Ltd. (2015) 370 ITR 288 also held that the position taken or urged by the assessee cannot be held against it if the primary jurisdiction does not exist i.e. to conclude an assessment in the name of a non existing entity.
14 Pr CIT Vs Shree Gopal Housing & Plantation IT Appeal 701/15 dt 6.2.18 (Bombay HC) Needless to state that considerations for imposition of penalty are undoubtedly different from considerations which would come into play while deciding the appeal in quantum proceedings. In case, if the respondent assessee succeeds in quantum proceedings, no occasion to impose penaly upon the assessee can arise. However in case the Revenue succeeds in the quantum proceedings, then that by itself will not necessarily invite penalty. It would still be open to respondent to urge that in the facts and circumstances of the case, no penalty is imposable.
15 CIT Vs Gee Kay Finance & Leasing ITA 935/09 Dt 8.2.18 (Delhi HC) is entitled to the succession certificate of the movable assets by way of an opinion by the higher official expressing satisfaction is on the record before a notice is issued under Section 148, in respect of a period beyond 4 years from the end of the relevant assessment
16 Pr CIT Vs Pavitra Commercial Ltd ITA 146/18 and Batch dt 9.2.18 (Delhi HC) As far as the question with respect to reporting of mercantile interest of doubtful debts is concerned, the question is covered by the decision of this Court in Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. (ITA 552/2005 and connected cases decided on 29.11.2010). The Court had applied “real income” principle to uphold the assessee’s contention
17 CIT Vs Prasidh Leasing ITA 637/2004 dt 20.2.18 assessee even made over a substantial part of it – `6.14 crores to Adani to whom it paid `43.5 lakhs as commission for the standing guarantor. The latter payment in the light of the transactions previously discussed strain ones’ credibility and does not accord with prudent commercial practice
18 Pr CIT Vs Vandana Gupta ITA 219/2017 dt 20.2.18 (Delhi HC) The mere offer therefore, of the amount during the search in the absence of any explanation for the source of income, renders the assessee’s argument insubstantial in the totality of circumstances.
19 CIT Vs MGF India Ltd. ITA378/04 dt 22.2.18 lease equalization charges are not to be treated as adjustments needing to be added back while computing book profits, under Section 115JA on account of Explanation 1.